The Indian stock market is expected to open on a positive note on Friday, rebounding from previous session's losses. However, sentiment is expected to remain cautious over elevated crude oil prices and weak global market cues.
On Thursday, the Sensex closed 460.30 points, or 0.62%, lower at 73,249.39, while the Nifty 50 settled 123.70 points, or 0.54%, lower at 22,687.65.
Nifty 50 formed a small candle on the daily chart with upper and lower shadow.
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Nagaraj Shetti, AVP, Technical Research at HDFC Securities, noted that this market action signals a formation of Doji type candle pattern which echoes continuation of down trend with heightened volatility.
“Sometime such Doji formations after a reasonable decline or at supports results in a reversal pattern on the upside. The immediate support of previous broken resistance as per change in polarity has been violated on the downside around 22,700 – 22,750 levels and Nifty closed lower,” said Shetti.
According to him, the underlying trend of Nifty 50 continues to be down, and further weakness from here could drag the index down to the next lower support of 22,300 – 22,200 levels by next week.
Any bounce back could find strong resistance around 22,900 levels, he added.
Stocks To Buy And Sell
Nagaraj Shetti has recommended two stocks to buy and sell for short-term. He suggests trading in these stocks for a timeframe of 2-3 weeks.
The technical stock picks for short-term are ITC Hotels and Titan Company shares.
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ITC Hotels | Buy | Target Price: Rs 175 | Stop Loss: Rs 155
ITC Hotels share price has been hovering in a broader high low range of Rs 150-165 levels over the last few months. The stock price has bounced back sharply from the lows on Thursday and is now placed near the decisive breakout. Consistent higher lows have been formed on the daily chart reiterating bullish bias for the stock price. Volume patterns and daily RSI show positive indication, Shetti said.
He recommends buying ITC Hotels shares at Rs 162, for a target price of Rs 175, while maintaining a stop loss at Rs 155 level. The timeframe for this trade is 2-3 weeks.
Titan | Sell | Target Price: Rs 4,090 | Stop Loss: Rs 4,485
Titan share price has been in a downtrend over the last couple of months.
Shetti observes a decline in the stock as per the bearish pattern like lower tops and bottoms. The stock price has failed to regain the base of 200day EMA during its recent pullback and slipped into subsequent declines from the lower highs. Volume patterns and daily RSI show negative indication.
He suggests selling Titan shares at Rs 4,348, for a target price of Rs 4,090, and keeping a stop loss of Rs 4,485.
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